Web Search & Marketing Newsletter - January 2012

Welcome to the first issue of our monthly newsletter for 2012 and we would like to take this opportunity to wish all our customers and readers a happy and prosperous New Year!

With another year gone, we try to predict some of the main trends that we expect for the online market over next 12 months, with a particular focus on the web search and marketing sector. We also review the predictions we made a year ago to see how they shaped up in 2011. We've covered many of these stories in our newsletter over the past 12 months, as well as on our Twitter account.

Looking back 12 months it's clear that the online sector continues to be one area of rapid growth and development, but one that continues to give online companies new opportunities and challenges. This past year saw notable growth in the use of smartphones as well as online shopping, plus there were the usual spate of developments from Google, including improved services in AdWords and Analytics, plus the launch of the new Google+ social networking service. Yahoo! continued to disappear as a search tool, taken over by Microsoft's Bing, and Facebook continued to dominate the social networking space despite various issues with users and privacy advocates. Once again it's been a stimulating marketplace and a great one for new business opportunities.

You can read more below, or you can also browse through previous editions of the newsletter, either by month or by subject .

On to this month's edition...

How did our predictions fare for 2011?

We made 5 predictions for 2011 last January, so here we review these and assess what actually happened during the year:

1) Rising CPCs encourage more creativity: there was certainly a further growth in the average Cost-per-Click (CPC) within PPC advertising campaigns - and in particular on Google AdWords - as the space for buying a high ranking position continues to become more competitive. Although markets vary, we estimate that bid prices have risen by around 15% on average, which means that, for most advertisers, the cost of a site visitor continues to rise and therefore conversion rates are becoming more important. The need for creativity applies both to the advertising campaigns and to the website where visitors land, and although there have been some advances in this area, many companies aren't doing enough yet to test landing pages, content changes, offers and checkout paths to improve conversions. At the advertising source, there is more data now available in Google AdWords to help users target their spend to the best areas and also a focus on Quality Score can help keep the cost per click down. However, the popularity of the PPC market is making it still more competitive and the ones who test and improve will survive.

2) Mobile marketing becomes more prominent: although the importance of mobile marketing has been slow to arrive, 2011 was definitely the turning point, with a notable growth in the use of smartphones in Australia (37% of all phones) and significant increases in mobile site visits recorded in website analytics. Google has certainly been encouraging mobile-specific activity through new services and data in AdWords, plus as user behaviour continues to changes, mobiles are becoming a more significant share of the search sector. The overall visitor share from mobiles for most websites is still below 10%, but the trend is now moving upwards at a faster rate and so companies have to think about their mobile marketing activity, including how their website appears on smartphones.

3) Location marketing will be a big new opportunity: as the use of mobile phones increases, so have the opportunities for local business marketing, which is a primary use of phone searches. Smartphone apps that use location targeting are growing, and social media is also developing these options, although sites like Foursquare haven't quite taken off and Facebook's location services have faced some privacy issues. Google Places has also gone through some structural changes in the past year and can remain a frustrating system, but local search remains a big opportunity for companies who rely on a localised market. Australia is not yet using the range of local marketing techniques being seen in the US and UK, but this will surely follow as the sector becomes stronger.

4) The line between social media and search becomes blurred: this has not been a clear cut trend over the past year, although social media remains the big new opportunity for companies to develop their marketing techniques, as well as being a frustratingly time-consuming process as well! The most notable event was the launch of Google+, their long-awaited social networking tool which is being closely integrated with Google accounts. This service will struggle to gain market share off Facebook (see below) but remains the most obvious way that social and search will work together to influence results - as can already be seen by users logged into Google when searching - as well as provide more signals back to Google on how search results may perform.

5) Video marketing and advertising gains market share: YouTube remains a significant traffic magnet, being one of the most visited sites on the web, and advertising opportunities here have increased so that the service's owners, Google, are starting to make a profit from the site at last. However, the use of video hasn't yet seen a significant increase in usage by online businesses that would be expected, mainly due to the perceived barriers to entry and the application of ideas for video use in specific sectors. It looks like this will remain more of an opportunity for those who are comfortable with the medium and can test the potential for their market.

What are our predictions for 2012?

We have made some more predictions for the main trends we expect to see in 2012, in terms of web search and online marketing. The online market continues to develop at a fast rate and new websites or services can change the landscape in a short space of time, but these are our expectations for the next 12 months:

1) Google+ will be central to 2012: with the full launch of Google's new social networking tool at the end of 2011, Google+ is likely to be a significant factor in 2012, but in what way is too early to tell yet. Initial reports of the growth in users was impressive, but take-up was linked to existing Google accounts and we've yet to see how Google+ is being used on a regular basis. The recent launch of business pages is important as a marketing tool, but the main issue for Google is to gain users, and usage, away from Facebook. There's too much riding on this product for Google to allow it to fail, in the way that Wave and Buzz did, so there are likely to be new developments in 2012 to integrate the Google+ product across all Google services and to promote and incentivise users away from Facebook. At this stage there doesn't appear to be enough of a 'pull' factor for social network users to make the move, but from a marketing point of view, the integration of Google+ (and the associated +1's) may become a big enough factor in terms of search results for companies to push the service harder with customers.

2) Online shopping sees big growth this year: the strong Aussie dollar over the past 12 months has seen a boom in online shopping, particularly from overseas retailers, to the concern of traditional retailers. Increasing confidence of web users to buy online and find better bargains will continue to boost this sector and give Australian retailers more opportunities - and incentives - to develop or improve their online presence (including Harvey Norman!). As the market grows it will also become more competitive around price, so the right business and marketing strategy will be vital. Google's recently launched Shopping / Product Search will help to boost this sector and provide new ways for retailers to get their products in front of potential customers.

3) Google AdWords targets mobile marketing: as noted above, mobile marketing is becoming a notable sector for search activity now and this is likely to continue in 2012. As a result, we expect Google AdWords to provide new ways for advertisers to make the most of this market, from data analysis, advert extensions and possibly new ad formats specifically for smartphones. In addition, the use of call tracking is expected to be launched in Australia over the coming year, to give advertisers more opportunities to get the most from their mobile marketing activity.

4) The new Google Analytics becomes a core marketing tool: the impressive Google Analytics service has become ubiquitous for business websites over the past year and this will now take another step forward with the full introduction of the new interface in 2012. Although Analytics is becoming more complex to use, the range of services and data being provided is getting even better and provides online businesses with one of their most important marketing tools. The issue for many companies is how to use the data effectively, to identify potential opportunities and to test changes to their marketing or website content. This may require training or consultancy help to get the most from the data, but however it's done, Analytics can't be ignored!

5) Social media marketing becomes more sophisticated: for many companies, using social media as a marketing tool remains a mystery or a frustrating use of resources. For many, now that the initial hype is starting to subside, the role of social media marketing will be to develop a suitable strategy that's manageable and also effective. This means building a quality community of followers, not based on volume but relevancy. It will mean creating content that's focused on these followers but is also part of an integrated marketing strategy with all other channels. And it will mean considering how social media and search can work together effectively to generate visibility, traffic, interaction and, ultimately, business!

We'll keep track of these predictions during 2012 and review them again in 12 months time. But for now, what's your view and do your predictions for the coming year differ? We'd love to hear from you!

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We hope you've found this month's newsletter useful. Please contact us if you need any more information on the items covered, or our advice on any aspect of your website's performance. Also, if there are any issues you would like to see in future editions of this newsletter, please submit your suggestions to us.